UK Government Endorsement

Posted 5/26/2011

Governments everywhere at every level are facing severe budget shortfalls. In a recent speech, Eric Pickles, a Member of the British Parliament and the UK Secretary of State for Communities and Local Government, cited procurement practices in general, and Opera's ability to optimize them in particular, as a means to realize millions in savings.

The following is an excerpt from Pickles' remarks:

Transparency can transform service delivery and the relationship between citizen and state. It can also highlight and improve procurement.

Take a ream of standard, A4, recycled, 80 gram photocopier paper - a "pile-it-high, sell-it-cheap" product. Under Labour, its bin quango, WRAP, was paying £3.29 a ream. The House of Lords paid just £1.65.

The South West RDA paid £1.48. Yet the Yorkshire RDA paid £3.20.

Paper may not sound like much. Yet the office stationery budget for the public sector is £850 million a year.

Many councils — like Hillingdon — are already using electronic auctions and the power of the internet to drive down procurement costs. E-auctions also open up contracts to small and medium firms, by levelling the playing field.

It's not just about paperclips. This is big money. Procurement spend across local government is £50 billion a year.

Respected industry experts — firms like Opera Solutions — have estimated that expert spending analysis followed by professional procurement practices could reduce local government costs by 10 to 20 per cent.

This represents savings to local government of up to £10 billion a year. This isn't a criticism of local councils — corporate bodies face exactly the same problems.

But attitudes need to be commercial. Challenges that Opera have identified include:

• Insufficient staff skills, as local government employees quite reasonably may not be procurement experts.
• A lack of sponsorship or buy-in from senior officers.
• A resistance to sharing and consolidation of procurement to get the best prices, as officers protect their territory.
• And the lack of consistent and clean spending data.

This just reinforces the need for political leadership from the top.